Expansions do not die of old age; they are generally killed by policy. Even this, the longest (as of July) economic expansion in American history, might have carried on a good while longer, had governments only left it alone: the inflationary excesses that commonly prompt central banks to pull in the reins had yet to show themselves.

So if indeed the long-feared recession has finally arrived, it will be something of an achievement. The signs are accumulating: an inverted yield curve for U.S. Treasuries, shrinking second-quarter output in the United Kingdom, declining manufacturing in Germany, sluggish growth in China. Friday’s bloodbath on the stock markets (stocks are now down six per cent from their mid-summer high) suggests investors have taken the hint.

Ordinarily it might be good news that the leaders of the G7 nations were to meet, by coincidence, in the same week: a co-ordinated statement of resolve to do right by their economies might be just the thing to restore investor confidence. In the circumstances, the best that can be hoped for from this weekend’s summit in France is that it does not afford President Caligula some fresh opportunity to demonstrate his unfitness for office.

For make no mistake, the recession, if it comes, will have Donald Trump’s stubby fingerprints all over it. There may be, as Adam Smith said, a “great deal of ruin” in a nation, but confidence cannot long be sustained in the face of a really determined attempt by those in power to undermine it. And nothing is better calculated to unnerve investors than the sense that the man at the helm of the world economy is on a suicide mission. If only this were just a metaphor.

The evidence that there is something very wrong with the president’s mental state has been available from the start, for those who bothered to pay attention. But so long as the economy was on a roll — a roll that began under his predecessor — it was possible to pretend it did not matter. After all, were taxes not being cut, regulation not unwound, whether in spite of the president or because of him?

But eventually the constant drumbeat of official insanity takes its toll. Indeed, the president’s condition appears to be deteriorating. In the past week alone Trump could be heard and seen refusing to visit Denmark because it would not let him buy Greenland, quoting with approval a right-wing radio host’s claim that Israelis love him as if he were “the second coming of God,” and proclaiming himself, in similarly messianic vein, the “chosen one” to lead America into its increasingly apocalyptic economic war with China.

As James Fallows notes in The Atlantic, if Trump were an airline pilot, or a submarine commander, or “in virtually any other position of responsibility,” he would already have been removed, or in the process of being so. But because he is in a position of total responsibility, “in charge not of one nuclear-missile submarine but all of them,” he remains untouchable.

But it was Friday’s extraordinary barrage — declaring the chairman of the Federal Reserve an “enemy” of the United States for failing to obey his demands for massive and instantaneous interest rate cuts, insisting that America would be “better off without” China, and “hereby” ordering all American companies to leave that country — that appears to have finally convinced investors: America is in the grips of a man who is, if not entirely disconnected from reality, at the least profoundly ignorant of it. It isn’t just Trump’s rhetoric that has the markets spooked. It’s also his policies: from the escalating tariffs on Chinese goods (and similar destructive trade wars with every one of America’s other largest trading partners), to his apparent belief in limitless monetary expansion, to the madness of running trillion-dollar deficits at the very peak of a 10-year expansion — and pledging to send them higher via more expensive tax cuts.

It isn’t just Trump’s rhetoric that has the markets spooked. It’s also his policies

Or, indeed, a recession. It’s been so long since we’ve had a recession, we’ve forgotten what they’re like. As unpleasant as their effects are generally, they do offer a certain clarity: as Warren Buffett has commented, in a recession, as with a retreating tide, you find out “who’s been swimming naked.” We may soon discover how many business plans, private or public, were predicated on permanent expansion.

If so, it will not be so easy a matter as all that to turn around. Even if fiscal policy were as effective as its proponents claim, that card would appear to already have been played, at least in the U.S. Neither does there appear to be much room for expansive monetary policy, with interest rates across much of Europe already in negative territory, and while central banks may have used direct infusions of liquidity, so-called “quantitative easing,” to good effect in the last recession, the experiment may not be so successful in the next.

The past few years have been an era of unprecedented political and economic folly — not only in America but elsewhere (hello, “no-deal” Brexit). The bill is about to come due.

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